buying on credit
When you buy something you probably pay for it straight away with money or cash as it's sometimes called.
If you don't have enough cash to pay for what you want, you may save up or borrow from a relative or friend.
Buying on credit is a way of borrowing money from a bank or finance company so that you can have what you want and pay for it later. Anyone who is over 18 years old can ask for credit.
Millions of people use credit to buy expensive things like cars or furniture, the sort of things that it could take years to save up for.
Most home owners use credit to buy their house or flat. It is called a mortgage.
There are lots of different types of credit.One of the most popular is a credit card which you can use to pay for goods.
Instead of handing money over you give your credit card.
You are allowed to spend up to a certain amount and you have to repay some of the money you owe to the credit card company each month.
The snag is that borrowing money costs money and you will end up paying back more than you borrow. The word for this extra amount is interest. The amount of interest that you pay can vary a lot depending upon the type of credit you have.
Some people use credit too often and find that they just cannot afford to pay back all that they have borrowed. They end up in debt. Some lose their homes and many of their possessions.
So you need to use credit wisely. Ask yourself:
- how much will the goods be if I pay cash?
- how much more will I pay if I buy on credit?
- how long would it take me to save the money?
- how much will the price go up while I'm saving?
- do I really need the goods or can I do without them? can I really afford them?
- what will happen if I can't keep up the payments?
- you can find out more at the Credit or Debt section of this website or contacting the office directly by e-mail.
Our Credit and Debt section will tell you more about Buying on Credit.
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